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Nov 14, 2024 8:00 PM - Gordon Thompson(Last modified: Nov 15, 2024 8:16 AM)
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M-tron Industries, Inc. (AMEX:MPTI) is a company that stands out in its industry for its effective use of capital. The company specializes in the design and manufacture of electronic components, which are essential in various technological applications. In a competitive landscape, MPTI's ability to generate returns significantly above its cost of capital is noteworthy.
MPTI's Return on Invested Capital (ROIC) is 20.30%, while its Weighted Average Cost of Capital (WACC) is 7.06%. This results in a ROIC to WACC ratio of 2.87, indicating that MPTI is generating returns nearly three times its cost of capital. This efficiency in capital use is a strong indicator of the company's financial health and operational effectiveness.
In comparison, The LGL Group, Inc. (LGL) has a ROIC of -1.26% and a WACC of 6.02%, resulting in a negative ROIC to WACC ratio of -0.21. This suggests that LGL is not generating enough returns to cover its cost of capital, which could be a concern for investors looking for efficient capital use.
SHF Holdings, Inc. (SHFS) presents a different scenario with a ROIC of 2.38% and a WACC of 6.05%. Although SHFS has a positive ROIC, it is still below its WACC, leading to a ROIC to WACC ratio of 0.39. This indicates that SHFS is not generating sufficient returns to justify its cost of capital, though it is performing better than LGL.
Gravitas Education Holdings, Inc. (GEHI) shows a severe underperformance with a ROIC of -192.71% and a WACC of 7.86%, resulting in a ROIC to WACC ratio of -24.51. This significant negative ratio highlights the company's challenges in generating returns, which could be a red flag for potential investors.
Climb Global Solutions, Inc. (CLMB) is another peer with a strong ROIC of 20.97% and a WACC of 9.23%, leading to a ROIC to WACC ratio of 2.27. While CLMB demonstrates efficient capital use, its ratio is slightly lower than MPTI's, indicating that MPTI remains the leader in generating returns above its cost of capital among its peers.
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